Congress Just Sent an Open Invitation for Real Energy Profits

Thanks to a rare example of bipartisan legislation that just cleared Congress, the energy efficiency push is on again.

Called the “Energy Efficiency Improvement Act,” the bill passed the House of Representatives last week after having been approved by the Senate.

The final bill was a very watered-down version of the idea first proposed.

But that is almost always what happens when Congress seeks the lowest common denominator. Reminds me of the old adage defining a camel as a horse designed by a committee.

Even though the legislation that now awaits a presidential signature turned out to be somewhat less grandiose than initially anticipated and is short on tangible specifics, as a first step it will do. And it’s going to open the doors to some real profit opportunities.

Here’s my take on the new bill… and where the best opportunities lie…

New Tenant Star Program

Essentially, this new legislation introduces three things.

First, it launches a new “best practices” certification program for commercial renters of building space. This will result in a “Tenant Star” approach paralleling the already (and very successful) “Energy Star” program for appliances, building construction and materials, and computers and peripherals, among other categories.

Energy Star was created in 1992 and is now recognized internationally. It designates products that use 20-30% less energy than required by U.S. federal standards.

Eliminated Regulations for Water Heaters

Second, and probably the most immediately substantive change, the bill eliminates regulations that have impeded building certain high-volume residential water heaters. I remember looking at the heaters when they were first designed and thinking this is where short-term improvements in energy efficiency could be most easily introduced.

Not so, as it turned out. By the time regulators had finished with their dabbling, the units were too expensive, time consuming, and complicated for most homeowners.

Water heaters have always been more energy intensive than just about anything else in an average home, adding the greatest chunk to the monthly power bill while wasting energy in the process.

However, large-scale water heaters designed to also be energy storage facilities were a very interesting development, allowing utilities to distribute energy during peak demand periods more efficiently. Sounded like a win-win.

Unfortunately, given the dual purpose of the devices, regulatory standards required a very involved series of tests and approvals. That is now being streamlined, and at least one genuine advance in widespread efficient energy usage is now going to be generally available.

Benchmarking Energy in Government Buildings

Third, the legislation will set up a process for benchmarking and disclosing the energy used in federally leased buildings. Much of this is currently available, especially in those buildings occupied by federal agencies. But the bill fills in the gaps when it comes to non-government tenants in what are otherwise government structures.

That’s it. A step forward… but not a big one.

There are questions whether such a limited approach could be used to advance more tangible efficiency projects. Some proponents of introducing better energy network usage have concluded the Energy Efficiency Improvement Act may end up being a one-shot standalone.

And here is where I think they have it wrong.

The Real Opportunities Are in the Private Sector

Yes, the government impacts prospects for energy efficiency. When we are dealing with a national energy grid, along with a range of production, delivery, storage, and usage issues, regulations are inevitable and even necessary.

But the real opportunities in moving on the efficiency front are not found there.

As always, they are found in the private sector’s response to the changing terrain.

I have been following several highly promising entrants into this space – providers of services to augment every aspect of the new highly efficient network from better storage systems to improved energy retention building supplies, to the smart grid technology that will revolutionize all of it.

Five years ago, much of this would have sounded like science fiction. Today it is being phased in.

The first objective is to improve the existing grid. But the ground is already being laid for a more efficient and productive infrastructure to replace what currently exists.

Remember, as I discussed in the last OEI, the U.S. (and global) infrastructure is in desperate need of a once-in-several-generations overhaul.

Renewed attention to efficiency here and abroad could not have come at a better time. It will serve to introduce a whole new age of profit making in the coordination and logistics of energy delivery and use.

So don’t look at the Energy Efficiency Improvement Act as any great accomplishment on its own. Regard it as an open invitation to the real action to come.

Right where we can make some nice money from what American and other entrepreneurs will do with the challenge.

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